Question

Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC). Both projects require an annual return of 18 percent. Year Deepwater Fishing New Submarine Ride 0 ?$ 1,040,000 ?$ 2,030,000 1 460,000 1,080,000 2 582,000 890,000 3 510,000 930,000 a-1. Compute the IRR for both projects. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places (e.g., 32.16).) IRR Deepwater Fishing % Submarine Ride % a-2. Based on the IRR, which project should you choose? Submarine Ride Deepwater Fishing b-1. Calculate the incremental IRR for the cash flows. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).) Incremental IRR 18.84 % b-2. Based on the incremental IRR, which project should you choose? Deepwater Fishing Submarine Ride c-1. Compute the NPV for both projects. (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) NPV Deepwater Fishing $ Submarine Ride $ c-2. Based on the NPV, which project should you choose? Deepwater Fishing Submarine Ride c-3. Is the NPV rule consistent with the incremental IRR rule? Yes No

Answer #1

Consider the following cash flows on two mutually exclusive
projects for the Bahamas Recreation Corporation (BRC). Both
projects require an annual return of 18 percent. Year Deepwater
Fishing New Submarine Ride 0 ?$ 1,035,000 ?$ 2,020,000 1 455,000
1,070,000 2 578,000 885,000 3 505,000 920,000 a-1. Compute the IRR
for both projects. (Do not round intermediate calculations. Enter
your answers as a percent rounded to 2 decimal places (e.g.,
32.16).) IRR Deepwater Fishing % Submarine Ride % a-2. Based on...

Consider the following cash flows on two mutually exclusive
projects for the Bahamas Recreation Corporation (BRC). Both
projects require an annual return of 18 percent.
Year
Deepwater Fishing
New Submarine Ride
0
−$
1,030,000
−$
2,010,000
1
450,000
1,060,000
2
574,000
880,000
3
500,000
910,000
Compute the NPV for both projects. (Do not round
intermediate calculations and round your answers to 2 decimal
places, e.g., 32.16.)
c-2.
Based on the NPV, which project should you choose?
...

Consider the following cash flows on two mutually exclusive
projects for the Bahamas Recreation Corporation (BRC). Both
projects require an annual return of 16 percent.
Year Deepwater New Sub Ride
0 −$ 995,000 −$ 1,940,000
1 415,000 990,000
2 546,000 845,000
3 465,000 840,000
a-1. Compute the IRR for both projects. (Do not round
intermediate calculations. Enter your answers as a percent rounded
to 2 decimal places, e.g., 32.16.)
IRR Deepwater Fishing _____ % Submarine Ride _______ %
Calculate the...

NPV versus IRR Consider the
following cash flows on two mutually exclusive projects for the
Bahamas Recreation Corporation. Both projects require an annual
return of 15 percent.
YEAR
DEEPWATER FISHING
NEW SUBMARINE RIDE
0
−$835,000
−$1,650,000
1
450,000
1,050,000
2
410,000
675,000
3
335,000
520,000
As a financial analyst for the company, you are asked the
following questions.
If your decision rule is to accept the project with the greater
IRR, which project should you choose?
Since you are fully...

Consider the following cash flows on two mutually exclusive
projects for the Bahamas Recreation Corporation. Both
projects require an annual return of 15 percent.
As a financial analyst for thecompany, you are asked the
following questions.
a.If your decision rule is to accept the project with the
greater IRR, which project should you choose? Explain why
b. Since you are fully aware of the IRR rule's scale
problem, you calculate the incremental IRR for the cash
flows. Based on your computation, which project...

ONLY NEED ANSWER TO C 1/ I know the answer to the other
questions
Consider the following cash flows on two mutually exclusive
projects for the Bahamas Recreation Corporation (BRC). Both
projects require an annual return of 16 percent.
Year
Deepwater Fishing
New Submarine Ride
0
−$
995,000
−$
1,940,000
1
415,000
990,000
2
546,000
845,000
3
465,000
840,000
a-1.
Compute the IRR for both projects. (Do not round
intermediate calculations and enter your answers as a percent
rounded...

NPV verses IRR Consider the following cash flows on the two
mutually exclusive projects for the Bahamas Recreation Corporations
(BRC). Both projects require an annual return on 14%
Year Deep Water Fishing New Submarine Ride
0 -$850,000 -$1,650,000
1 320,000 810,000
2 470,000 750,000
3 410,000 690,000
a) If your decision rile is to accept the project with the
greater IRR, which project should you choose?
c) To be prudent, you compute the NPV for both projects. Which
project should you...

Consider the following cash flows of two mutually exclusive
projects for Tokyo Rubber Company. Assume the discount rate for
both projects is 11 percent.
Year
Dry Prepreg
Solvent Prepreg
0
–$
1,740,000
–$
770,000
1
1,104,000
395,000
2
908,000
640,000
3
754,000
398,000
a.
What is the payback period for both projects? (Do not
round intermediate calculations. Round your answers to 2 decimal
places, e.g., 32.16.)
b.
What is the NPV for both projects? (Do not round
intermediate...

Consider the following cash flows of two mutually exclusive
projects for Tokyo Rubber Company. Assume the discount rate for
both projects is 12 percent.
Year
Dry Prepreg
Solvent Prepreg
0
–$
1,800,000
–$
800,000
1
1,110,000
425,000
2
920,000
700,000
3
760,000
410,000
a.
What is the payback period for both projects? (Do not
round intermediate calculations. Round your answers to 2 decimal
places, e.g., 32.16.)
b.
What is the NPV for both projects? (Do not round...

Garage, Inc., has identified the
following two mutually exclusive projects:
Year
Cash Flow (A)
Cash Flow (B)
0
–$
28,000
–$
28,000
1
13,400
3,800
2
11,300
9,300
3
8,700
14,200
4
4,600
15,800
a-1
What is the IRR for each of these projects? (Do not
round intermediate calculations. Enter your answers as a percent
rounded to 2 decimal places, e.g., 32.16.)
IRR
Project A
%
Project B
%
a-2
Using the IRR decision rule, which...

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